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State bill could put limits on limos in Detroit

If approved by the state Legislature, Detroit could regain control of regulating limousine services in the city, a move operators of limos and a ride-sharing service say will largely bar them from working inside city limits.

"It would put a line around the city of Detroit," said Nicholas Kokas, vice president of Chesterfield Township-based Brentwood's Distinguished Executive Transportation. "The city of Detroit is choosing who you have to use, rather than you choosing."

Senate Bill 748, which was approved in June and awaits action in the House, would amend state law to require limousine operators to comply with a local vehicle-for-hire ordinance in cities with a population of more than 500,000. It amends an existing 2000 law that set the threshold at 750,000, but hasn't been applicable since the 2010 census showed Detroit's population had fallen below that.

If SB 748 becomes law, Detroit would once again be the only city in the state to regulate limos the same way it regulates taxis.

There is no state law governing taxis, but the Michigan Department of Transportation considers any vehicle for hire that operates without a meter and charges customers a flat rate to be a limousine.

Previously, the city required a limo picking up customers in Detroit to purchase a bond plate, often referred to as a medallion. There are 1,300 medallions available in the city, and must be purchased from a third party that owns one.

Barring a medallion, the only way a limousine was able to operate in the city would be if a customer outside the city limits requested service to Detroit and then the limo driver waited until the customer was ready to return. That drives up the price and makes it uncompetitive with taxis, Kokas said.

Melvin "Butch" Hollowell

What would happen if SB 748 is passed is less clear.

Detroit Mayor Mike Duggan's office did not respond to several attempts for comment on the legislation.

Melvin "Butch" Hollowell, Detroit's corporation counsel, said there needs to be careful consideration of the bill, but that the city should have the ability to regulate limos again.

He also said there should be an adjustment to the number of medallions available in the city, without saying if the 1,300 now available should be increased or decreased. But he noted it is the same amount the city had in the 1950s when the population was around 2 million.

A matter of safety

Matthew Oddy, operations manager at Detroit-based Checker Cab Co., told a Senate panel in February that when limousines fell out of Detroit's regulation, all sorts of businesses sprouted up with people operating minivans and small cars after having them licensed by the state as limos.

That is a safety issue for customers, he said, because limo operators do not have to pass a criminal background check nor have their limos inspected by the city the way taxi drivers and their cabs do.

Kokas said that although MDOT does not do criminal background checks on drivers, does require proof of appropriate insurance and that insurance companies do background checks on the drivers before issuing policies.

Michael Frezell, a spokesman for MDOT, which handles the licensing of limousines in the state, said the number of limo companies has grown from 823 in 2012 to 992 now, but couldn't say how much of that growth occurred in Detroit.

"We have been seeing an increase in the limousine business," he said.

In Wayne County, there are 1,851 limos owned by 357 companies. In Oakland County, there are 1,122 limos owned by 197 companies and in Macomb County, there are 441 limos owned by 97 companies.

But the big picture, opponents of the bill say, is that limousine service is meant for intrastate travel, and if every city had its own licensing requirements, the industry would die because limo drivers would have to pay to get permits or a local license to drive through those cities.

Taxis operate within the cities that regulate them and give them authority to pick up customers within their borders.

Kokas said the bill would also damage Detroit's economy, because most customers of limo drivers are from out of town. If the bill becomes law, the drivers would not recommend attractions in Detroit, because they wouldn't be able to drive them there.

The effect on Uber

The ride-sharing service Uber Technologies Inc., which has been operating in Detroit since March 2013, has referral agreements with local limousine companies to use their drivers to pick up Uber customers in their limos in Detroit.

The company opposes the bill.

"The state bill seeks to protect the special interests of the existing transportation industry in Detroit by stifling competition of licensed limousine operators," Uber spokesperson Lauren Altmin said in a statement. "If passed, hundreds of state-licensed limousine drivers currently serving residents of the area would no longer be able to operate in Detroit."

She said many drivers who have worked with Uber have grown their businesses and improved transportation options in the city.

Kokas' company has a referral agreement with Uber and said passage of SB 748 would leave Uber largely unable to operate in the city.

Kokas said the city needs more transportation options, not fewer, given all the economic development going on in downtown and Midtown.

"If you want to be part of a growing economy, you have to catch up with technology," Kokas said. "It's the future; people want these services."